What is a Worker Owned Cooperative?

Worker cooperatives are business entities that are owned and controlled by their members, the people who work in them. All cooperatives operate in accordance with the Cooperative Principles and Values. The two central characteristics of worker cooperatives are: (1) worker-members invest in and own the business together, and it distributes surplus to them and (2) decision-making is democratic, adhering to the general principle of one member-one vote. The international worker cooperative federation CICOPA established basic standards for worker cooperatives in the World Declaration on Cooperative Worker Ownership (also known as the Oslo Declaration) at ameeting in Oslo, Norway in 2003. The US Federation of Worker Cooperatives has signed on to this document.

Though we lack comprehensive data on the nature and scope of worker cooperatives in the U.S., researchers and practitioners conservatively estimate that there are over 350 democratic workplaces in the United States, employing over 5,000 people and generating over $500 million in annual revenues.

Legal forms

The corporate form for cooperatives varies. In states where there are cooperative incorporation statutes, businesses can incorporate as worker cooperatives. In states where there are no such statutes, democratic workplaces can take a variety of forms: S or C corporations, LLCs, etc. Whatever its incorporation status, a worker cooperative must create, in policy and practice, mechanisms for workers to make the decisions that affect the functioning and governance of the business.

Types of businesses

Worker-owned business and democratic workplaces exist across the country, with the greatest concentrations in the Northeast, the West Coast and the Upper Midwest. The vast majority of worker cooperatives in the United States are small businesses, with a few notable larger enterprises. Many are concentrated in the retail and service sectors. There are also well-established worker cooperatives in manufacturing and the skilled trades. Traditionally there has been a strong cooperative presence in food production, processing and and sales. In the past ten years, we have also seen the growth of worker cooperatives in the technology sector and home care.

Benefits

Cooperatives are the only form of business centered around membership, and member and community benefit is at the core of the cooperative model. Worker cooperative businesses are owned and run by their members, the people who work in them, and they operate for the benefit of these members.

The member benefits are multiple. A cooperative can be a way for people to start and own a small business together when they may lack the means or expertise to do so alone. Worker cooperative members can build assets in their cooperative business by retaining surplus every year in individual capital accounts. In a worker cooperative, workers own their jobs, so they decide how they are treated and how they want to operate the business. Worker-owners also get a lot of practice making decisions, building their skills in a variety of areas, and participating democratically in a process to benefit the larger group. These are the skills and habits of engaged community members, and they don’t stop at the workplace: you will often find worker-owners involved in the community in other ways.

Community benefits are clear too. Successful worker cooperatives tend to create long-term stable jobs, enact sustainable business practices, and develop linkages among different parts of the social economy. Worker-owned businesses have not only a direct stake in the local environment but the power to decide to do business in a way that is sustainable for us all. The worker cooperative movement is increasingly recognized as part of the larger movement for sustainability and a new economy based on people’s needs.

Cooperatives have a long history as a way for working people to create good, dignified jobs that they control, particularly for people who lack access to business ownership or even stable work options. Organizations undertaking economic development to build wealth in poor communities and communities of color have used worker cooperatives as a powerful vehicle for addressing economic inequality. Worker cooperatives have been shown to provide better working conditions and wages for typically low-wage work, and to increase household wealth for low-income workers. Worker cooperatives can also play an important role in building movements for economic justice and social change. As institutions where real democracy is practiced on a day to day basis, they are a model for the empowerment we will need to create the change we envision. As economic engines, they meet material needs, anchoring capital and jobs in communities.

International Cooperative Alliance Statement on the Cooperative Identity

Definition

A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.

Values

Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others.